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The threat of rent control is already hurting tenants



Rents are high and many are struggling to afford their rent. There is no denying that it is a problem that needs to be fixed, and urgently. Although the way to address the root cause of the problem is widely known to be through increasing supply, the Greens want to cap rents, thinking it will eliminate the rent increase headlines. We disagree and go so far as to say it will worsen the situation for tenants who are already struggling.


The Greens have recently introduced a bill to Parliament that seeks to cap rent increases to CPI, plus 10 per cent of CPI. In real terms, we are mostly talking owners being allowed to increase the rent on their property by a single digit dollar figure once a year, without the matter going to the Residential Tenancy Commissioner and the onus being on the owner to demonstrate that the increase is reasonable.


There are many faults and risks with this proposed quick fix but let us start at the start.

Rental owners are still reeling from the faulty rental moratorium that the Tasmanian Government implemented that lasted for 10 long months and made it legal for each and every Tasmanian tenant to not pay their rent without consequence. This unfathomable, extreme and absurdly unconditional legislation has done significant damage to any trust landlords have in the residential tenancy legislation and their faith that they will be treated fairly by government.


Also recently published has been the report from the Premier’s Economic and Social Recovery Advisory Council which highlights the importance of being strategic, and not inadvertently adding to housing shortage issues and driving up rents. In addition to validating the flaws in Tasmania’s rental moratorium logic and design that our Association has been highlighting for months, it goes on to say that the moratorium passes the costs for social policy to landlords and sends “a message to potential investors about ‘sovereign risk’ in residential investment in Tasmania, which in turn could have a meaningful impact on the future willingness of investors to grow Tasmania’s rental housing stock.”


And yet, here we are again. Another reactive, desperate grab for a quick fix, another short-sighted proposal, another deterrent to rental ownership that has already begun to backfire.

If rent caps were to be legislated, we would see many owners sell up at premium prices to owner-occupiers (including those fresh off the Spirit of Tasmania), too frustrated at the removal of yet another of their fair rights. We would see the price for rental properties being set at the highest rate the market would tolerate from the outset, knowing that any scope for increases during a tenancy are severely restricted. Many tenants would likely no longer enjoy the financial benefits of stable rent in exchange for being a great tenant. Instead, rents increasing annually by the maximum allowable amount would become the norm as owners would be too wary of letting the gap widen between what the tenant is paying and the true market rate, knowing catch up would be impossible. Even now, just the threat of rent control being on the table, is motivating owners to increase the rent of their property to market rate in fear that that right will soon be removed.


The sad reality is that those pushing for rent caps, are already making it worse for those they are trying to protect. Rent caps are not the answer to this systemic problem that has been snowballing for many years due to negligence and neglect. We must direct our attention and energy to true fixes, those that see new homes coming to the market and social housing stock, boosting supply, creating healthy competition and mending the holes in the safety net.


From the Premier’s Economic and Social Recovery Advisory Council Final Report


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